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MARKET SNAP: At 6:12 a.m. ET, S&P 500 futures down. Treasury yields flat. Nymex down six cents at $95.28; gold down 1% at $1,432.90. In Europe, FTSE 100 down 0.3%, DAX down 0.5% and CAC 40 down 0.3%. In Asia, Nikkei 225 up 1.2% and Hang Seng down 1.4%.

WATCH FOR: April Retail Sales (8:30 a.m. Eastern Time): Seen down 0.4%; previously down 0.4%. March Business Inventories (10:00): Seen up 0.3%; previously up 0.1%. Home Inns & Hotels Renren and Take-Two Interactive are among a small number of companies reporting quarterly results.

The timing of such Fed action is still being debated, and it’s widely expected that the central bank’s moves will be gradual. They could take months, or years, to unfold. But the mere chatter of a shift in policy pushed stock and bond futures lower Sunday evening, while the dollar rose against major currencies.

“With each passing day of modest labor-market improvement, the Fed is by definition closer to its exit,” Dan Greenhaus, chief global strategist at New York brokerage firm BTIG, told MoneyBeat. “However, I’m not sure why we should be shocked that the Fed is refining its tools for winding down and ending asset purchases.”

The Fed’s policies have been a major underpinning behind the stock market’s big rally over the past four years. The Dow has more than doubled since March 2009, soaring above 15000 this month for the first time. It is up 15% year-to-date, off to its best start since 1999.

But markets have been more jittery than usual whenever word has filtered out of Fed officials talking exit strategies. Minutes from the past few Fed meetings have generated patches of volatility in the markets. “Were the Fed to signal the end of QE … the bull market would end,” billionaire investor Stanley Druckenmiller said at the Ira Sohn conference last week.

How the Fed manages expectations throughout this whole process will be a key determinant in how financial markets react to the news.

“The key is transparency,” Ryan Detrick, senior technical strategist at Schaeffer’s Investment Research. “One thing about the Fed over the past few years is they have been very clear in their thoughts. That transparency has been welcomed by Wall Street. The Fed is well aware of this and will probably do what they can to keep it that way.”

Morning MoneyBeat Daily Factoid: On this day 10 years ago, the government unveiled a color version of the $20 bill in an effort to combat counterfeit versions of the domestic currency.

-Steven Russolillo

STOCKS TO WATCH

Tesla Motors is likely to remain in focus on Monday after surging 41% this week, its best weekly performance since it went public in 2010. The electric-car maker reported its first quarterly profit ever on Wednesday, helping the stock soar to record highs.

SeparatelyPost Holdings, the maker of Honey Bunches of Oats, Pebbles and Grape Nuts, is expected to report on Monday second-quarter earnings of 27 cents a share, according to a consensus survey by FactSet.

On Monday after the market close, Take-Two Interactive Software is likely to post fourth-quarter earnings of 23 cents a share.

MUST READS (LINKS)

Fed Maps Exit From Stimulus: “Federal Reserve officials have mapped out a strategy for winding down an unprecedented $85 billion-a-month bond-buying program meant to spur the economy—an effort to preserve flexibility and manage highly unpredictable market expectations.”

A Top Contender at the Fed Faces Test Over Easy Money: “The next chief of the Federal Reserve will decide when to reverse its easy-money policies, a judgment that could strangle the economic recovery if made too early or trigger runaway inflation if made too late.”

As Yellen Forecast, Inflation Has Remained Below Target: “As the U.S. was emerging from recession in June 2009, Janet Yellen made a forecast: “I think the predominant risk is that inflation will be too low, not too high, over the next several years,” Ms. Yellen, then president of the Federal Reserve Bank of San Francisco, said in a speech.”

IPOs Set to Raise Most Cash Since Crisis: “U.S. companies are on track to raise the most money through initial public offerings since before the financial crisis, driven by the same thirst for risk among investors that has pushed the stock market to new highs.”

China Makes Gains But Doubts Persist: “China recorded a modest improvement in its industrial output and retail sales in April but the slight gains were not enough to erase concerns over a weak recovery for the world’s second-largest economy.”

MoneyBeat: Worst of Euro Zone Crisis Not Over: “A majority of European investors believe the worst of the euro-zone crisis isn’t over yet, with weak economic growth prospects the central concern, a survey by Fitch Ratings said Monday.”

MoneyBeat: Goldman Sachs Buys Into Indian Healthcare: “The bank has invested 1.1 billion rupees, or about $20 million, in a medical device firm in India, its second investment in the country this month, and its latest in the healthcare sector.”

Economic Road Clearing, but the Going Is Slow: ”After four years of crises that threatened to plunge the U.S. economy back into recession, the road ahead at last looks comparatively free of roadblocks. But progress remains slow.”